AMC Entertainment soars 37% after it avoids bankruptcy with near $1 billion cash infusion
- AMC Entertainment soared on Monday after the movie theater chain said it raised $917 million via debt and equity over the past month.
- The near $1 billion capital infusion into AMC will help the company avoid bankruptcy, according to the CEO.
- "Today, the sun is shining on AMC...any talk of an imminent bankruptcy for AMC is completely off the table," AMC CEO Adam Aron said.
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AMC Entertainment is no longer on the verge of bankruptcy after it raised $917 million via debt and equity over the past month, the company said in a statement on Monday.
The announcement led to a 37% surge in shares of AMC on Monday, with the highly shorted company joining the ranks of GameStop, BlackBerry, and Bed Bath & Beyond in posting eye-popping rallies over the past week.
AMC raised $506 million from the sale of 164.7 million new common shares, and secured $411 million in incremental debt that is in place through mid-2023, according to the statement.
The company believes its current cash pile has extended its financial runway "deep into 2021," based on certain assumptions and expected future attendance levels.
Much of AMC's assumptions on future attendance levels is predicated on a swift rollout of vaccines to the general population.
"For AMC to succeed over the medium term, we are going to need for much of the general public in the U.S. and abroad to be vaccinated," CEO Adam Aron said.
A wrench that could be thrown into AMC's reopening plans is if a vaccine resistant COVID-19 strain forms, which Goldman Sachs has estimated could reduce economic growth by a third in 2021.
But for now, "the sun is shining on AMC," Aron said, adding that "any talk of an imminent bankruptcy for AMC is completely off the table."
